Elon Musk’s AI Startup in Revenue-Sharing Talks with Tesla
On September 8, 2024, it was reported that Elon Musk’s artificial intelligence startup, xAI, is in discussions with Tesla, Inc. (TSLA) about entering a revenue-sharing agreement. This potential deal would see xAI provide technology and resources to Tesla in exchange for a share of the revenues generated by the electric car manufacturer.
According to The Wall Street Journal, the agreement would enhance the collaboration between Musk’s various companies. Tesla plans to utilize xAI’s AI models to improve its driver-assistance software known as Full Self-Driving. In return, a portion of the revenue from this initiative would be shared with xAI.
Additionally, xAI is set to assist in developing new features at Tesla, which could include a voice-activated assistant within Tesla’s vehicles and software for its humanoid robot, Optimus.
However, Musk publicly denied the report, stating that no licensing agreement with xAI is necessary. He emphasized that Tesla has gained valuable insights from xAI engineers that have aided in achieving unsupervised Full Self-Driving capabilities.
Revenue-Sharing Dynamics
The specifics of the revenue-sharing arrangement would likely depend on how much Tesla depends on xAI’s technology for its projects. Executives at xAI are reportedly considering a 50-50 split of the revenue derived from Tesla’s Full Self-Driving features.
A potential partnership would align with Musk’s approach of intertwining resources across his business empire. Nevertheless, some Tesla shareholders have raised concerns over these arrangements, alleging that diverting resources to xAI could adversely impact Tesla’s investors. Legal action concerning these claims is currently pending in the Delaware Court of Chancery.
“Tesla has learned a lot from discussions with engineers at xAI,” Elon Musk stated, reinforcing his dismissal of the revenue-sharing claims.
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